Unfortunately, one company’s gain is another’s loss. In this specific case, it happens to be the entire U.S. airline industry that loses out. Typically, domestic carriers are prohibited from securing the same favorable financial packages that are given to foreign airlines. This gives foreign carriers a distinct competitive advantage. It reduces foreign airlines’ costs and allows them to offer cheaper tickets, effectively pricing out their competition. In turn, American carriers have to make sacrifices in order to remain competitive, so much so that some reports estimate that the Ex-Im Bank has caused the American airline industry to lose as many as 7,500 jobs.
Even a Congress that has failed to pass a budget is not totally oblivious to this issue. In 2012, a large number of Republicans rallied against the Ex-Im Bank’s lending practices and forced language into the Bank’s reauthorization legislation that called on it to perform economic impact analysis before approving or guaranteeing any loans. This language was supposed to protect American employers from any ancillary consequences.
Yet, the Bank has veered from its Congressional mandate. Most recently, it announced a massive $650 million loan to an Australian iron ore mining company that happens to be owned by one of the country’s richest people, a billionaire. This has invoked the ire of many Midwestern Democrats, who represent mining states that will be put at a competitive disadvantage thanks to the loan.
Congress took a step in the right direction when it directed the Ex-Im Bank to analyze the impact of its financial transactions, but the Bank’s most recent actions do not coincide with the intent of the legislation passed by the legislative branch. It is unfortunate that it took a federal shutdown to end the Ex-Im Bank’s harmful practices, but when Congress eventually passes a budget the Bank will continue right where it left off. Once the budget issue is resolved, Congress should direct its attention to the Ex-Im Bank and revoke its charter in an effort to preemptively protect American employers from any further damage from this out-of-control bureaucracy.